Passenger Cars Powertrain Market Outlook
The global passenger cars powertrain market is projected to grow from US$ 789.4 billion in 2024 to US$ 1,456.27 billion by 2031, registering a CAGR of 9.14% from 2025 to 2031.

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Executive Summary and Global Market Insights

The passenger cars powertrain market is undergoing a significant transformation, driven by the global push toward electrification, environmental sustainability, and cutting-edge propulsion technologies. Stricter emissions regulations and government incentives for cleaner mobility solutions are prompting automakers to accelerate investments in electric and hybrid powertrains.

This shift is underpinned by rapid advancements in technology, including high-voltage architectures, advanced battery management systems, and integrated smart systems that improve vehicle performance, energy efficiency, and connectivity. While internal combustion engines (ICEs) continue to serve certain markets—particularly where EV infrastructure is still emerging—the long-term trajectory clearly favors electrified powertrain solutions.

Regional Trends and Competitive Landscape

Asia-Pacific, led by countries like China and India, is emerging as a key growth region, supported by rising urbanization, favorable regulatory frameworks, and strategic investments in EV infrastructure. Global automotive leaders such as Toyota, Volkswagen, and Hyundai, along with powertrain specialists like BorgWarner and ZF Friedrichshafen, are at the forefront of innovation and expansion.

Despite the strong growth outlook, the market faces several challenges, including high R&D costs, infrastructure limitations, and ongoing supply chain disruptions. Nevertheless, the shift toward electrification, hybridization, and smart powertrain technologies is reshaping the industry and positioning it for sustained, long-term growth.

Passenger Cars Powertrain Market – Segmentation Analysis

The passenger cars powertrain market is segmented based on drive type, propulsion type, sales channel, and geography. These key segments offer insights into evolving industry trends and consumer demand patterns.

By Drive Type

The market is categorized into:

• Front-Wheel Drive (FWD)
• Rear-Wheel Drive (RWD)
• All-Wheel Drive (AWD)

In 2024, the Front-Wheel Drive segment held the largest market share, driven by its widespread adoption in compact cars, sedans, and small SUVs. FWD systems offer better fuel efficiency, lower manufacturing costs, and improved space utilization—attributes that appeal to urban consumers and budget-conscious buyers.

By Propulsion Type

The propulsion segment includes:

• Internal Combustion Engine (ICE)
• Electric

While ICE vehicles continue to dominate the global market, especially in cost-sensitive and infrastructure-limited regions, electric vehicles (EVs) are gaining substantial traction. The shift is propelled by regulatory mandates, emissions targets, and growing environmental awareness.

By Sales Channel

The sales channel is segmented into:

• OEM (Original Equipment Manufacturer)
• Aftermarket

The OEM segment leads the market due to high demand for factory-fitted powertrain systems in new vehicles. It benefits from the rising production of hybrid and electric passenger cars and the expansion of integrated connected vehicle systems. Meanwhile, the Aftermarket segment is witnessing notable growth, fueled by vehicle longevity, rising demand for powertrain upgrades, and a growing emphasis on vehicle customization and sustainability.

By Geography

Geographically, the market is segmented into major regions, with Asia Pacific dominating the global landscape in 2024. Key contributors include China, India, and Japan, supported by rapid urbanization, industrialization, and expanding middle-class populations. Emerging economies in Southeast Asia, such as Indonesia, Vietnam, and the Philippines, are also showing rapid growth due to increasing vehicle ownership and favorable government initiatives.

Market Drivers and Opportunities

1. Stringent Emission Regulations and Government Incentives

Global efforts to reduce greenhouse gas emissions are reshaping the powertrain landscape. Stringent regulations, such as the Euro 7 standards in Europe and Corporate Average Fuel Economy (CAFE) standards in the U.S., are pressuring automakers to prioritize low-emission technologies. Government incentives, including tax rebates and purchase subsidies for EVs, are accelerating consumer adoption and stimulating market growth.

2. Technological Advancements and Declining Battery Costs

Innovation in electric powertrain technologies is a major market catalyst. Breakthroughs in battery energy density, motor efficiency, and fast-charging capabilities are enhancing EV performance and appeal. Importantly, the continued decline in lithium-ion battery pack costs is narrowing the price gap between EVs and ICE vehicles, facilitating broader market penetration.

Market leaders and key company profiles

  Toyota Motor Corporation

  Honda Motor Co. Ltd.,

  Ford Motor Company

  Hyundai Motor Company

  General Motors Company

  Volkswagen Group

  BMW AG

  Daimler AG (Mercedes-Benz Group AG)

  BorgWarner Inc.

  ZF Friedrichshafen AG

Passenger Cars Powertrain Market Report Coverage and Deliverables

The "Passenger Cars Powertrain Market Outlook (2021–2031)" report provides a detailed analysis of the market covering below areas:

• Passenger Cars Powertrain market size and forecast at global, regional, and country levels for all the key market segments covered under the scope
• Passenger Cars Powertrain market trends, as well as market dynamics such as drivers, restraints, and key opportunities
• Detailed Porter's Five Forces and SWOT analysis
• Passenger Cars Powertrain market analysis covering key market trends, global and regional framework, major players, regulations, and recent market developments
• Industry landscape and competition analysis covering market concentration, heat map analysis, prominent players, and recent developments for the Passenger Cars Powertrain market
• Detailed company profiles

The geographical scope of the Passenger Cars Powertrain market report is divided into five regions: North America, Asia Pacific, Europe, Middle East & Africa, and South & Central America. The Passenger Cars Powertrain market in Asia Pacific is expected to grow significantly during the forecast period.

The Asia Pacific Passenger Cars Powertrain market is segmented into China, Japan, South Korea, India, Australia, New Zealand, Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam, Taiwan, and Bangladesh. The Asia-Pacific (APAC) region is poised to not only dominate the global passenger car powertrain market in terms of volume but also to witness the highest and fastest growth rate in the coming years. This exceptional growth is a multifaceted phenomenon driven by a powerful combination of government ambition, manufacturing prowess, and burgeoning consumer demand.

The Asia Pacific region experiences substantial growth in its Passenger Cars Powertrain market because of Aggressive Government Policies and Subsidies, Manufacturing and Supply Chain Supremacy, Rising Urbanization and Economic Growth etc.

China continues to be the unparalleled leader. Its market is characterized by hyper-competition among domestic brands (like BYD, Nio, and XPeng) and international giants, leading to rapid innovation and a wide variety of EV models available to consumers.

India represents the next frontier of growth. While currently dominated by ICE vehicles, the passenger EV market is expanding at an explosive rate from a low base, driven by new model launches and growing consumer awareness.

With mature markets such as Japan and South Korea driving the technological innovation through highly efficient hybrid systems and cutting-edge BEV technology. Other ASEAN countries like Thailand, Indonesia, and Vietnam are emerging as the next wave of growth. With government support and investment from major Chinese, Japanese, and Korean automakers, this region is quickly becoming a key battleground for market share in the affordable EV segment.

Passenger Cars Powertrain Market Research Report Overview

This report offers a comprehensive analysis of the Passenger Cars Powertrain Market, presenting both qualitative and quantitative insights across various segments—drive type, propulsion, sales channel, and geography.

Report Structure:

• Chapter 2: Key Takeaways
  Summarizes the critical trends, market outlook, and strategic highlights shaping the passenger car powertrain landscape.
• Chapter 3: Research Methodology
  Details the methodology used in compiling and analyzing the data, combining primary and secondary research.
• Chapter 4: Ecosystem and Porter’s Analysis
  Provides an overview of the market ecosystem, key stakeholders, and Porter’s Five Forces analysis to understand market dynamics.
• Chapter 5: Market Dynamics
  Explores key growth drivers, restraints, emerging opportunities, and future trends. This chapter also includes an impact analysis of these factors.
• Chapter 6: Market Scenario and Forecast
  Offers a historical perspective of market revenues and provides forecasts through 2031.
• Chapters 7 to 9: Market Segmentation Analysis
  Covers detailed revenue forecasts and driving factors across segments such as:
• Product type
• Portability
• Technology
• Application
• End user
  Analysis is provided across five key regions: North America, Europe, Asia Pacific, Middle East & Africa, and South & Central America.
• Chapter 10: Competitive Analysis
  Presents a comprehensive assessment of key players through a heat map analysis and competitive benchmarking.
• Chapter 11: Industry Landscape
  Analyzes global business activities including market initiatives, product developments, mergers, acquisitions, and joint ventures.
• Chapter 12: Company Profiles
  Features detailed profiles of leading market players, outlining:
• Company overview
• Business operations
• Product and service offerings
• Financials
• SWOT analysis
• Key strategic developments
• Chapter 13: Appendix
  Includes glossary of terms, list of abbreviations, and legal disclaimers.

Recent Market Developments:

The market evaluation is based on extensive primary and secondary research, incorporating data from corporate filings, industry associations, and proprietary databases. Notable recent developments include:

• June 9, 2025 – Tata Motors announced an investment of INR 35,000 crore (~US$ 350 billion) over five years to boost its passenger vehicle business. The funds will be allocated toward expanding product lines, integrating next-gen technologies, and enhancing profitability.
• July 2024 – Stellantis expanded its hybrid powertrain offerings across Europe in response to rising demand. The automaker had 30 hybrid models available by 2024 and plans to introduce six more by 2026.

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Author's Bio
Akshay
Senior Market Research Expert at Business Market Insights